I learned, from HN actually, that the reason for this is actually because taxes must be included and enumerated so that the public know the rate and thus can be cognizant of taxes levied against them. Probably goes back to the founding of America being a country that started in large part out of a rebellion against taxes.

While at this point it makes more sense to come up with a new law/methodology, I understand the thought process. If an item is $5 final price you don't know how much the tax actually was. The taxes can be raised easily and only those paying close attention to local or state politics would know. It's a backstop against government greed.

Again, I think we could reform this tax code and tip culture. However, I believe you legally have to include the tax. Maybe you simply should only be able to advertise the final price, but on the receipt it shows the tax rate.